The American dollar found room to recover some ground at the end of the week, ending it anyway with strong losses against most major rivals. Having posted a session low level of 1.2912 in Asian market hours earlier today, the USD/CAD pair caught some fresh bids and built on Friday’s modest rebound from 3-1/2 month lows. Currently hovering around the 1.2935-50 regions, testing daily tops, the pair seemed rather unaffected by a combination of negative forces and traded with a mild positive bias for the second consecutive session. As of writing this article, the USDCAD pair is trading at 1.2945 up 0.22% on the day. Despite a strong follow-through uptick in the US Treasury bond yields, the US Dollar failed to preserve early gains and has now drifted into negative territory.
Bullish Crude Oil Price Helped Loonie Limit US Greenback’s Uptrend Momentum
Traders also seemed to have shrugged off the ongoing bullish run in crude oil prices, which tends to underpin demand for the commodity-linked currency – Loonie. In fact, WTI crude oil prices surged to over two-month tops at the start of a new trading week, albeit did little to prompt any fresh selling and stall the pair’s ongoing steady bounce from the vicinity of the very important 200-day SMA support. OPEC opted to not even bother discussing increasing output at their latest meeting. The crude cartel will be meeting again in early December, but with the consortium not even hitting their current output caps, US President Donald Trump’s demands that OPEC soothes market fears caused by US sanctions on Iran are unlikely to be met and such a situation with high crude oil price will be very supportive to commodity linked currency Loonie.
It, however, remains to be seen if the recovery move is backed by any genuine buying or is solely led by some short-covering as investors still await fact checks on the North American Free Trade Agreement (NAFTA). Immediate resistance is pegged near the 1.2975 horizontal zone, above which the pair seems all set to surpass the key 1.30 psychological mark and aim towards testing the 100-day SMA barrier near mid-1.3000s. On the flip side, the 1.2900 handle now seems to protect the immediate downside, which is followed by support at multi-month lows, around 1.2985 area, and the 1.2870-65 region (200-day SMA).
This article was originally posted on FX Empire
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